The enactment on June 19, 2001 of the Uniform Principal and Income Act, EPTL 11-A-1 and the additions to the Prudent Investor Act of sections 11-2.3(b)(5) and 11-2.4 of the EPTL are the most recent steps New York has taken to allow fiduciaries to fully adopt contemporary investing techniques commonly referred to as “Modern Portfolio Theory.”
Since 1995, New York trustees have been guided by the Prudent Investor Act[1]� which made sweeping changes in the way fiduciaries manage trusts. Without the new additions however, trustees have struggled to achieve the benefits of investing for total return using Modern Portfolio Theory as conceived by the framers of the Prudent Investor Act.[2]� Since the early 19th century, the Prudent Man Rule first detailed in a Massachusetts Supreme Court case, Harvard College v. Amory,[3]� held that a fiduciary had the duty to “observe how men of prudence, discretion and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable outcome, as well as the probable safety of the capital invested.” (Emphasis added.)
